S.B. ABDUL AZEEZ (BY LRS.) versus M. MANIYAPPA SETTY & ANR.

Citation: [1988] SUPP. 3 S.C.R. 505 · Decided: 14-10-1988 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Dismissed

Judgment (excerpt)

: 
S.B. ABDUL AZEEZ (BY LRS.) 
v. 
M. MANIYAPPA SETTY & ANR. 
OCTOBER 14, 1988 
[R.S. PATHAK, CJ AND S. NATARAJAN, J.] 
Karnataka Rent Control Act, 1961-Section J(h)-Definition of 
Landlord-Whether includes usufructuary mortgagee who is entitled to 
be in possession of the mortgaged property and/or to receive the rents 
and profits in lieu of interest or in payment of the mortgage money. 
Held-Yes. 
Karnataka Rent Control Act, 1961-Section 2 I(l)(h)-Whether 
usufructuary mortgagee with possession stands on a part with owner of 
building to seek eviction of tenant. Held-Yes. 
A 
B 
c 
D 
The appellant, now represented by his legal representatives, had 
taken on rent certain premises and was in occupation thereof. On the 
basis of a usufructuary mortgage executed by the landlord in their 
favour, the respondents who are the partners, sought the eviction of the 
appellant under section 2l(l)(h) of the Karnataka Rent Control Act, 
i961 on the ground that they were bona fide in need of the premises to 
E 
run their business. The appellant's defence was that the usufructuary 
mortgage was a sham and nominal transaction created by the landlord 
with an oblique motive because he had refused to pay higher rent for the 
premises and secondly the mortgagees were not bona fide in need of the 
premises for their business. The Trial Court rejected both the defences 
and ordered eviction and the said order was affirmed by the appellate F 
court and the High Court. Hence this appeal. 
Dismissing the appeal, this Court, 
HELD: The definition of 'landlord' in Section 3(h), is an inclusive 
definition and would take within its fold an~ peroon who for the time G 
·being is receiving or is entitled to receive the rent in respect of the leased 
premises .. The person receiving or entitled to receive the rent may do so 
either on his. own account or on account of or on behalf of or for the 
benefit of any other person or as a trustee, guardian or receiver for any 
other person. A mortgagee with possession undoubtedly falls under the 
first category as under Sec. 58(d) of the Transfer of Property Act, he is 
H 
505 
A 
B 
i c 
D 
506 
SUPREME COURT REPORTS 
[ 1988] Supp. 3 S.C.R. 
entitled to receive the rent on his own account and this factor makes the 
usufructuary mortgagee stand on a higher and different footing than 
other persons accorded the status of a landlord under Section 3(h) 
because their entitlement to receive rent is on behalf of or for the benefit 
of others and not on their own account. [SlOF-H] 
V. Baluswamy Servai v. N. Raju Servai, [1966] 2 MLJ 4; T. 
Ezhumalai v. Padmavathi Ammal, [1971] 2 MLJ 121; Aswatharamiah 
v. Special Deputy Commissioner, [1977] i Karnataka Law Journal 332; 
S. Subramanayaswamy v. Deputy Commissioner, Bangalore, AIR 1981 
Karnataka 190; R. Vijendra v. H.R. & A. C., !LR 1988 Kar. 1591, 
referred to. 
If the legislature so wanted, it would have undoubtedly cate-
gorised a mortgagee with possession also as one of the excluded class of 
landlords for the purpose of sec. 2l(l)(h) of the Act. Obviously the 
legislature has not done so as would appear from the explanation to 
clause 4 of sec. 21. [SUD-El 
A mortgagee with possession, steps into the shoes of the mort-
gagor and becomes entitled to all the rights of the mortgagor and the 
only right left with the mortgagor is the right of redemption. A mort-
gagee with possession is entitled to be in possession of the mortgage 
property as long as it is not redeemed. If the mortgagee with possession 
leases back ihe property to the mortgagor, he acquires the rights of a 
lessor and is. entitled to enforce the terms of the lease against the 
mortgagor. [5 UF -G] 
· 
Mathur Lal v. Keshar Bai & Anr., AIR 1971 SC 310, referred to. 
F 
there can be no doubt that a mortgagee with possession stands 
very differently from other kinds of landlords envisaged under section 
3(h) of the Act. He is therefore entitled, as much as the owner himself, 
to seek recover.Y of _possession of the leased _premises from a tenant for 
his own bona fide requirements of use. [SUG-H] 
O 
V. Baluswamy Servai v. N. Raju Servai, [1966) 2 MLJ 4; R. 
Vijendra v. H.R. & A.C., ILR 1988 Kar. 1591, approved. 
The appellant's argument that a scheming landlord can adopt the 
devious method of creating a sham _deed of usufructuary mortgage In . 
order to have a tenant evicted has no force because it fails to note that 
H an o.rder of eviction under sec. 2l(l)(b) would not be passed by the 
'. S

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